In the previous blog, I discussed the strategies for improving sourcing performance.
Lets’ now venture into the changing definition of strategic sourcing.
Ardent Partners analysts have defined strategic sourcing as, “the process of identifying, evaluating, negotiating, and implementing the optimal mix of goods and services that best support the objectives of the enterprise.” This remains a solid baseline definition that covers the basic tenets of the process, it does not however account for the changes in business and widespread technology adoption that have occurred in the last few years.
Driven by globalization and improvements in technology the global supply market has been redefined. The product and business cycles are getting shorter. Technology has made it possible for businesses to source and procure any commodity or services virtually via electronic means. Thus bypassing manual paper-based work.
A more modern and relevant definition of strategic sourcing should include –
Agility: with the changing business dynamics, strategic sourcing teams need to be “light on their feet” in regards each sourcing opportunity and category managed. Agility translates into the ability to quickly leverage alternative suppliers for a given commodity, part, or service in the event of a supply disruption. It could also mean adjusting – Service level agreements (SLAs) with suppliers in the event of sudden business changes. While a strategic sourcing program should follow standardized processes, larger sourcing events will likely require greater analysis, process rigor, and tighter execution than smaller, tactical sourcing events. Thus, being agile –being able to tailor processes and solutions to meet given needs.
Process automation tools: are the pinnacle of the modern strategic sourcing programs. The modern procurement technology tools like spend analysis, supplier management etc. enhances the sourcing process by helping the team keep up with the rapidly changing business needs.
Considering the complexity of modern day supply-market, Ardent Partners offer an updated definition of Strategic Sourcing “Leveraging process automation tools to quickly identify, evaluate, negotiate, implement, and adjust the optimal mix of goods and services that best support the constantly evolving objectives of the enterprise”.
In the next blog I’ll explore the adoption of sourcing technology.
Meanwhile, tell us your definition of modern-day sourcing.
For detailed reading you can access the complete Ardent Partners report on The State of Strategic Sourcing by clicking on the download button below.
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